Gulfstream continues strong rebound

Posted: Thursday, January 26, 2006

With fourth-quarter net sales up nearly $100 million and increases in funded backlog orders and deliveries, Savannah-based Gulfstream Aerospace continued its climb back to profitability, helping parent company General Dynamics (NYSE:GD) post a 21 percent increase in earnings for the last quarter of 2005.

"We couldn't be more pleased with our business model at Gulfstream and the way the product is being received in the marketplace," General Dynamics chairman and CEO Nicholas Chabraja told analysts in a conference call Wednesday. "I'm also very pleased with Gulfstream's research and development and their continuing efforts to bring new technology and new products to the marketplace."

Gulfstream rolled out its new G150, a mid-size luxury business jet in the fourth quarter. The G150 is expected to help Gulfstream increase by nearly 50 percent the number of mid-size aircraft delivered in 2006, Chabraja said.

Gulfstream also will increase production to meet increased marketplace demands, he said.

"We'll go from 89 deliveries in 2005 - 63 large and 26 midsize aircraft - to 111 deliveries in 2006 - 72 large and 39 mid-size," he said.

"With a 13 percent increase in revenues and a 6 percent increase in earnings, Gulfstream is definitely looking good," said Paul Nesbit, aerospace analyst for JSA Research Inc. in Newport, R.I. "And, because they had some one-time expenses in the fourth quarter and increased production slated for 2006, I expect their numbers to go up even more this year."

General Dynamics, which operates a total of four business units - aerospace, information systems and technology, combat systems, and marine systems - reported fourth-quarter earnings of $406 million, or $2 per share, up from $336 million, or $1.66 per share, in the last quarter of 2004.

The earnings beat the consensus estimate of Wall Street analysts surveyed by Thomson First Call, who predicted earnings of $1.97 a share.

The company increased sales and earnings in all four of its business units. For the year, overall earnings increased 19 percent, from $1.23 billion, or $6.09 per share, in 2004 to $1.46 billion, or $7.22 per share, in 2005.

General Dynamics stock fell $1.46 to $114.34 at the close of trading on the New York Stock Exchange Wednesday.